Cooperative compensation in real estate is the arrangement where the listing broker shares part of the seller-paid commission with the brokerage that brings the buyer. The practice still exists, but the way it is offered and documented changed on August 17, 2024, when National Association of Realtors settlement rules removed compensation offers from the Multiple Listing Service and required buyers to sign written agreements with their agents before touring a home.
What Changed on August 17, 2024
Before the settlement took effect, a listing broker could post the buyer-side offer directly on the MLS. Any agent searching listings could see, for instance, that a property offered 2.5% to a cooperating broker. That is no longer allowed. MLS platforms cannot publish compensation offers to buyer brokers, and no one may use MLS data to build an outside platform that does the same thing.1National Association of Realtors. Summary of 2024 MLS Changes
The rules go further. MLS listings also cannot disclose the total commission negotiated between the seller and listing broker, and agents cannot filter listings by the compensation offered to the cooperating broker. A buyer’s agent, in other words, cannot quietly hide low-commission homes from search results.1National Association of Realtors. Summary of 2024 MLS Changes
Cooperative compensation itself was not banned. Sellers can still offer to pay the buyer’s agent. What changed is the delivery mechanism: the MLS is no longer the bulletin board for those offers.
How Compensation Offers Get Communicated Now
Without a central posting, buyer’s agents have to ask. The most direct route is a phone call or email to the listing broker to find out what, if anything, the seller is offering toward buyer-agent compensation. Many brokerages also post compensation information on their own websites for their active listings.
The other common path is negotiating compensation as part of the purchase offer itself. A buyer can submit an offer that asks the seller to pay the buyer’s agent fee, either as a specific dollar amount or a percentage of the sale price. Seller concessions can appear on the MLS, but with one restriction: any concession shown there cannot be conditioned on or tied to a payment to the buyer broker.2National Association of REALTORS®. Compensation, Commission and Concessions
Written Buyer Agreements
Since August 17, 2024, any agent who participates in an MLS and works with a buyer must have a signed written agreement in place before touring a home, including live virtual tours. It is not optional, and it applies each time an MLS participant shows property to a buyer they are working with.3National Association of REALTORS®. Written Buyer Agreements 101
The agreement has to include a few specific elements:
- A specific dollar figure or percentage the agent will earn, clear enough that anyone reading it can calculate the number. Open-ended language like “whatever the seller offers” does not satisfy the rule.
- A cap on what the agent can receive. The agent cannot collect more from any source than the amount in the buyer’s contract.
- A plain statement that broker fees are not set by law and are fully negotiable.
The term is flexible. Some buyers sign for a single showing, others for a specific time period or geographic area. NAR does not dictate the length. The financial point to watch is this: if the seller or listing broker offers less than what the buyer’s agreement specifies, the buyer can be responsible for covering the gap out of pocket. Reviewing the compensation terms before signing is one of the most consequential steps in the current process.4National Association of REALTORS®. Consumer Guide to Written Buyer Agreements
Protection Periods After Termination
Most buyer representation agreements include a protection period, sometimes called a tail period. If a buyer ends the agreement and then buys a property the agent had already shown them, the agent may still be entitled to their commission. The broker typically provides a list of properties they introduced during the representation, and if the buyer closes on one of those within the protection window, the fee is owed as though the agreement were still active. The length is negotiable and should be read carefully before signing.
How the Listing Agreement Sets the Split
The money the buyer’s broker receives originates in the contract between the seller and the listing brokerage. That agreement states the total compensation, either as a percentage of the sale price or a flat dollar amount, and it also specifies whether and how much the listing broker may share with a cooperating broker. Standard listing forms include dedicated fields for this figure, either as a separate percentage of the purchase price or a fixed dollar amount.
None of these numbers are set by law, and every listing agreement should say so. The seller and listing broker negotiate the total fee and the cooperating share independently. A seller who wants aggressive marketing might agree to a higher cooperating share to attract more buyer agents; a seller in a hot market might offer less.
Variable Rate Commissions
Some listing agreements use a variable rate, meaning the total commission changes depending on who brings the buyer. If the listing broker’s own firm produces the buyer and handles both sides, one rate applies. If an outside brokerage brings the buyer, a different rate applies. When this structure exists, the listing broker must disclose it to any cooperating broker who asks, and should disclose the difference between the two rates.
When No Buyer Agent Is Involved
If a buyer arrives without an agent, the cooperating share does not automatically vanish from the seller’s bill. What happens depends on the language of the listing agreement. The listing broker often ends up walking the unrepresented buyer through financing, inspections, disclosures, and the offer, and some listing brokers negotiate a higher fee for that added work. The seller usually still pays less overall than with a separate buyer’s agent involved. This is a term to clarify with the listing broker before signing.
The Math on a Real Split
Once the percentages are set, the mechanics are straightforward. Say a home sells for $400,000 and the listing agreement calls for a 5% total commission with 2.5% offered to a cooperating broker. The seller owes $20,000 at closing. The listing brokerage receives $10,000 and the buyer’s brokerage receives $10,000. Both amounts come out of the seller’s equity before the net proceeds are calculated.
If the final sale price comes in higher or lower than the list price, the commission adjusts proportionally because it is calculated on the actual purchase price. The math self-corrects regardless of how negotiations play out between buyer and seller.
Using Seller Concessions to Cover the Buyer’s Agent Fee
A common approach now is for the buyer to ask the seller for a concession that can be applied toward closing costs, including the buyer’s agent fee. The request typically appears as a line item in the purchase offer. Seller concessions can cover a range of transaction costs, such as loan origination fees and prepaid expenses, not only agent compensation.2National Association of REALTORS®. Compensation, Commission and Concessions
Mortgage programs cap how much the seller can contribute. The limits depend on the loan type:
- FHA loans: seller concessions are capped at 6% of the sale price.
- VA loans: the limit is 4% of the sale price.
- Conventional loans: the cap varies with the buyer’s down payment. Smaller down payments tend to carry lower concession limits, and larger ones allow more. A lender can confirm the exact threshold for a given situation.
If a concession exceeds the applicable cap, the excess can reduce the appraised value for loan purposes and cause financing complications. Buyers planning to use concessions to pay their agent should confirm the numbers with their lender early.
How the Money Actually Moves at Closing
Funds change hands through the escrow or title company acting as a neutral intermediary. That third party prepares the Closing Disclosure, which itemizes every charge, credit, and payment in the deal, including the commission splits.5Consumer Financial Protection Bureau. Owning a Home – Closing Disclosure
The title company disburses funds directly to each brokerage from the seller’s proceeds, sending separate payments to the listing brokerage and the cooperating brokerage. The listing broker does not collect the full commission and then forward a portion to the buyer’s side. Both brokerages should review the Closing Disclosure before the deed is recorded to confirm the amounts match what was agreed to.
Why the Arrangement Is Still Legal
Cooperative compensation between brokers sits inside a specific legal safe harbor. Federal law generally prohibits kickbacks and fee-splitting for real estate settlement services when a federally related mortgage is involved, but the statute carves out an explicit exception for cooperative brokerage arrangements between real estate agents and brokers, as long as the payments are for services actually performed.6Office of the Law Revision Counsel. 12 USC 2607 – Prohibition Against Kickbacks and Unearned Fees
The implementing regulation makes the same point: fee divisions within real estate brokerage arrangements are allowed when all parties are acting in a brokerage capacity. The exemption does not extend to splits between real estate brokers and mortgage brokers, which stay prohibited.7eCFR. 12 CFR 1024.14 – Prohibition Against Kickbacks and Unearned Fees
The practical takeaway from the post-settlement landscape is narrow. Compensation offers no longer appear on the MLS, and buyers now sign written agreements that fix their agent’s fee before any tour. The underlying practice of one broker paying another for bringing a ready buyer is still fully lawful, provided the payment corresponds to actual work.